How to Outsource Your Bookkeeping [Complete Guide]

Mar 13

When your business’ MRR grows, bookkeeping & accounting tasks tend to follow suit.

And as a SaaS founder, your time is best invested in other daily operations.

So, it's no surprise that many SaaS owners look to outsource their bookkeeping at some point on their journey.

In this article, we'll explore how to outsource bookkeeping, its benefits and drawbacks, as well as costs associated with it.

But before we move on, let’s answer the question: why?

Why outsource your bookkeeping?

Keeping a local bookkeeper on your payroll has its benefits. There's no denying that.

But for a majority of businesses, hiring someone to keep their books organized full-time is — somehow — seen as a waste of time and money.

Of course, there's a reason why more than 65% of employers say they would rather outsource specific bookkeeping duties instead of handling them on their own.

Luckily, bookkeeping is one of those tasks that can easily be outsourced without negative consequences for your business.

There are several good reasons to outsource your bookkeeping:

Minimizing personnel: You may not have the staff or resources to handle bookkeeping in-house.

Keeping additional staff members inherently generates more capital costs. Outsourcing it to a professional service can free up your personnel to work on more critical tasks.
Avoiding fraud: Fraud is a significant concern for any business and can be challenging to detect. A typical organization loses 5% of its revenue due to fraud every year.

By outsourcing your bookkeeping to a trustworthy source, you can reduce the risk of fraud and ensure that your financial records are accurate.
Scalability and adaptability: As your business grows, you'll need to ensure that your accounting and bookkeeping systems can handle the increased workload.

Outsourcing your bookkeeping can help you quickly and easily scale up your operations without hiring additional staff.
Lack of expertise: In the beginning, many owners try to keep track of all of their financial records. However, most soon become bogged down by the task.
If you're feeling overwhelmed by bookkeeping, it's time to outsource.
Unorganized paperwork: Paperwork can quickly become unorganized and difficult to manage if you're unfamiliar with accounting procedures.

By outsourcing your bookkeeping, you can ensure that your paperwork is entirely kept in order at all times.

If all of these reasons weren't enough to persuade you, there's one more thing you should be aware of: outsourcing bookkeeping can help you save a lot of money.

How much does it cost to outsource bookkeeping?

The cost of outsourced bookkeeping is anywhere between $500 and $2,500 monthly.

The cost of outsourcing your bookkeeping will vary depending on the service provider you choose.

Just like hiring an in-house bookkeeper and defining their role, you'll have to decide what tasks you need to outsource.

The actual cost mainly depends on the number of monthly transactions the bookkeeper needs to track.

Generally, the more complex and time-consuming your bookkeeping needs are, the higher the cost of outsourcing will be.

The good news is that, as your business grows, you can quickly increase the scope of the services you're outsourcing without having to incur any additional costs.

However, several factors will impact how much it costs you to outsource your bookkeeping:

Industry: The accounting and bookkeeping needs of the manufacturing industry are much different from those of a business in the services industry. The cost of outsourcing will reflect this.
Headcount: Businesses with fewer employees usually outsource more accounting and bookkeeping tasks than businesses with more employees. That is simply because there are more financial transactions to track with more employees.
Needed services: Finding someone to handle bookkeeping isn't a one-size-fits-all solution. To determine how much it will cost, you need to know precisely what you want your bookkeeping service to handle.

In addition to coding bank activity, you can also outsource sales invoicing, budgeting, and financial analysis, among other things.

Keep in mind that, while this is a significant investment, the long-term benefits of outsourcing will far outweigh the costs.

As a matter of fact, research shows that outsourcing bookkeeping can help you save between 40% and 60% of your yearly budget.

Benefits and drawbacks of outsourcing your bookkeeping

What's the point of outsourcing any task?

No more wasted time on administrative tasks you have little to no experience with and focusing on running your business more efficiently. You're taking a step back to allow an expert to handle this specific task and allowing you to move on.

Outsourcing your bookkeeping is no different.

Benefits of outsourced bookkeeping

Benefits of outsourcing your bookkeeping include:

Extra free time: Let's start with the most apparent benefit. Once you've outsourced your bookkeeping, you'll have more time to focus on other essential tasks for your business.

You'll no longer have to spend hours upon hours every week trying to keep up with your finances. As a result, not only will your business flourish, but you'll notice your stress levels going down too.

Proper reporting: When you outsource your bookkeeping, you'll have access to high-quality reports tailored to your needs. That will help you make better strategic decisions for your business.
Improved efficiency: By outsourcing your bookkeeping, you're essentially getting a team of experts working for you. That means less time wasted on administrative tasks and more time spent developing your business.

You'll focus on what you do best and leave the accounting to the professionals.
Saved money: We've already mentioned that you can save as much as 60% of your yearly expenses by outsourcing bookkeeping. Let's elaborate on it. Hiring a bookkeeper would cost you in many ways.

There's their paycheck, of course. Then, there are the annual and sick leaves - work functions and benefits.
Not to mention office equipment and material costs. All of that isn't cheap. You know what is? Outsourcing.

Drawbacks of outsourcing bookkeeping

While there are many benefits to outsourcing your Bookkeeping, there are also a few drawbacks to consider:

Risk of picking the wrong service: The most significant risk involved in outsourcing your bookkeeping is picking the wrong service. Make sure you research and find a reputable company with a good track record.
Danger to confidentiality: When you outsource your bookkeeping, you're giving sensitive financial information to a third party. Make sure that the company you choose has robust security measures in place and will protect your data at all costs.
Possibility of scams: One of the dangers of outsourcing is the risk of scams. When you give someone else access to your financial information, you're opening yourself to potential abuse.

Ensure you do your research and find a reputable bookkeeping service to minimize this risk.

Potential loss of control: Another potential downside is the loss of control. When you outsource a task, you're giving away some level of authority.

You need to trust the person or company you're working with to make this arrangement work. If that trust isn't there, it could lead to problems down the road.

How to outsource bookkeeping services

Now that we've outlined the benefits and drawbacks of it let’s talk about how to outsource bookkeeping.

The process might look simple on the surface. However, there are still many things to consider if you want your choice to be perfect.

First, you need to know what to look for.

What to look for in a bookkeeping service

When outsourcing your bookkeeping, you need to ensure that the platform you're looking at is reputable and has a good track record. Here are some of the most important things to look for:

Flexibility: One of the most important things to look for is flexibility. The bookkeeping service you choose should adapt to your changing needs.
Experience: Make sure that the company you're considering has a lot of experience in the field.
Technology: The bookkeeping service should be up-to-date on the latest accounting technologies. That will make the process easier for both you and them.
Price: Obviously, price is an important consideration when outsourcing anything. Make sure you find a balance between quality and cost.

Bookkeeping service vs. hired bookkeeper

One of the choices you'll have to make when outsourcing your bookkeeping is using a service or outsourcing your work to an individual bookkeeper.

Experts on demand: When you work with a bookkeeping service, you have access to experts who can help you with any bookkeeping questions or problems you may have.
No training required: A good bookkeeping service will provide all the training and support you need. You don't have to worry about how to use their software or train your new employee.
Seamless audit process: When you outsource your bookkeeping, the auditor will have a much easier time auditing your business. They won't have to spend as much time tracking down all the information they need.
Tax compliance: A bookkeeping service will ensure that your business is tax compliant. With an experienced service, you'll have guaranteed peace of mind.
Cost-effective: A bookkeeping service is often more affordable than hiring an in-house bookkeeper.

Now that you know what to look for, how do you go about finding a bookkeeping service?

How to find a bookkeeping service

There are many blurred areas between tax filing, accounting, and actual bookkeeping.

To find the exemplary service, you need to make sure that it can handle all of the following tasks:

Ability to import financial information from your bank and credit card statements, invoices, and payroll records.
Automation. The service needs to have the ability to connect to all of your accounts and financial software you might be using.
Income and bill tracking is an enormous plus. In addition, account payable/receivable management is an excellent perk to have.
It needs to ensure that your books are balanced and compliant with the latest accounting standards.
Providing detailed financial reports at the end of each month. The service needs to provide income, cash flow, and balance sheet statements that can be used and understood by you, your team, your investors, and anyone else that may require access to them.

How to set up your bookkeeping service

Depending on your choice - you can go with a bookkeeping service or a freelance bookkeeper - the process of setting up your bookkeeping may look a bit different.

A good process looks something like this:

Step 1: The dedicated bookkeeper will help you set up all the integrations and connect your financial accounts to the service.
Step 2: All financial data is pulled from various sources and stored online.
Step 3: The bookkeeper will record, categorize, and reconcile all of your transactions for the given period (or periods, if you have requested catch-up bookkeeping for prior periods beyond the most recent month).
Step 4: At the end of each month, from then on, you'll receive a complete financial report from your bookkeeping service.
Step 5: You can tweak your yearly budget based on financial analysis and cash flow forecasting every few months.

Closing thoughts

Think of outsourcing your bookkeeping services as a healthy investment that will not only free up your valuable time but give you more energy.

In addition, using an affordable bookkeeping service like Flight Financial will help you upgrade your business operations and improve your bottom line in the long run.

Flight Financial charges a flat fee that covers everything from bookkeeping and management reports to financial statements with no-tricks pricing plans and transparent operations.

If you're still unsure about outsourcing your bookkeeping or would like to learn more about how Flight Financial can help your business, don't hesitate to get in touch. Schedule a 25-minute web conference meeting with us — and let’s talk finance.

Nathan Vander Heyden